The chances of a recession are waning, according to a new analysis from banking giant Goldman Sachs (GS) -) which sees a 20% chance the U.S. economy will fall into a recession over the next 12 months.
That figure is down from the 25% chance the firm gave for a U.S. recession previously.
"The recent data have reinforced our confidence that bringing inflation down to an acceptable level will not require a recession," Goldman Sachs chief economist Jan Hatzius said in a note Monday, according to Yahoo.
Low unemployment, strong consumer sentiment that is at a nearly two-year high and falling jobless claims all point to economic strength for Goldman Sachs, but everything isn't roses for the economy ahead.
"We do expect some deceleration in the next couple of quarters, mostly because of sequentially slower real disposable personal income growth --especially when adjusted for the resumption of student debt payments in October -- and a drag from reduced bank lending," Hatzius said.
One thing hasn't changed for the bank though, it's view of the chances of a recession are still way below that of most of their peers on Wall Street.
Of the business and academic economists recently polled by the Wall Street Journal, 54% said they expected the U.S. to fall into a recession over the next 12 months.
But that forecast is down from the 61% who said the same in two prior surveys.
While the bears see a higher probability of severe trouble ahead, Goldman sees fuel for bigger economic gains on the horizon.
"The easing in financial conditions, the rebound in the housing market, and the ongoing boom in factory building all suggest that the U.S. economy will continue to grow, albeit at a below-trend pace, Hatzius said.
